01—Abstract
Summary
Summary of the 10-K filed February 28, 2018. Cited figures are marked; the original filing is the authoritative source.
PNC Financial Services Group, Inc. reported strong financial performance for the year ended December 31, 2017, with net income increasing by 35% to $5.4 billiona, or $10.36 per diluted common share, compared to $4.0 billion, or $7.30 per diluted common share, in 2016.
This growth was driven by an 8% increase in total revenue, primarily from a 9% rise in net interest income and a 7% increase in noninterest income. The company also benefited significantly from the Tax Cuts and Jobs Act enacted in late 2017, which resulted in a substantial decrease in income tax expense and a lower effective tax rate for the year. The balance sheet remained strong, with total assets growing by 4% to $380.8 billionb, driven by loan and deposit growth.
Credit quality remained stable, with a decrease in nonperforming assets and net charge-offs compared to the prior year. PNC maintained a strong capital position, with its Transitional Basel III common equity Tier 1 capital ratio at 10.4%c at year-end 2017. The company also returned capital to shareholders through share repurchases and increased dividends, demonstrating a commitment to shareholder value.
02—Key points
Key Highlights
- Net income increased by 35% to $5.4 billion in 2017, driven by revenue growth and a significant benefit from tax reform.
- Total revenue grew by 8% to $16.3 billion, with net interest income up 9% and noninterest income up 7%.
- The effective income tax rate decreased significantly to 1.9% in 2017 from 24.1% in 2016, largely due to the Tax Cuts and Jobs Act.
- Total assets increased by 4% to $380.8 billion, supported by loan growth of 5% and deposit growth of 3%.
- Credit quality remained stable, with nonperforming assets down 14% and net charge-offs decreasing compared to 2016.
- PNC maintained strong capital ratios, with the Transitional Basel III common equity Tier 1 capital ratio at 10.4% at year-end 2017.
- The company returned $3.6 billion in capital to shareholders through dividends ($1.3 billion) and share repurchases ($2.3 billion) in 2017.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 28, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $16.33B$15.16B | +7.7% |
| Interest Expense | $1.71B$1.26B | +35.3% |
| Net Income | $5.39B$3.98B | +35.2% |
| EPS (Basic) | $10.49$7.42 | +41.4% |
| EPS (Diluted) | $10.36$7.30 | +41.9% |
| Shares Outstanding (Basic) | 481.00M494.00M | −2.6% |
| Shares Outstanding (Diluted) | 486.00M500.00M | −2.8% |
05—Questions
Frequently Asked Questions
What was PNC's primary driver of net income growth in 2017?
PNC's net income increased by 35% in 2017, primarily driven by an 8% increase in total revenue, boosted by higher net interest income and noninterest income. A significant contributing factor was the benefit recognized from the Tax Cuts and Jobs Act, which substantially lowered the company's income tax expense.
How did PNC's loan and deposit growth perform in 2017?
PNC experienced solid growth in both loans and deposits. Total loans increased by 5% to $220.5 billion, with commercial lending showing particular strength. Total deposits grew by 3% to $265.1 billion, reflecting a shift towards relationship-based savings products.
What is the company's outlook for loan growth and revenue in 2018?
PNC expects loan growth to be in the mid-single digits (percentage basis) for the full year 2018. Revenue is also projected to increase by mid-single digits, supported by expectations of accelerated U.S. economic growth, increased business investment, and consumer spending driven by tax cuts.
How did the company's equity investment in BlackRock impact its results?
PNC's equity investment in BlackRock contributed positively to its financial results. Asset management noninterest income saw an increase, partly due to the flow-through impact of the federal tax legislation on this investment. BlackRock's earnings also directly contributed to PNC's reported earnings.
06—Continue